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It’s been some time since companies could raise cash in debt markets and come away feeling like they got the better end of the deal.
China’s all-or-nothing stock market is losing momentum, after three months of what might be best described as forced buying of a deeply oversold asset.
New Statistics Canada data shows investors made up almost one third of homeowners in some provinces in 2020.
A gauge of US services snapped back in January after an end-of-2022 slump, suggesting a resurgence in consumer demand that leans against concerns of an imminent economic slowdown.
Sales in the Toronto housing market ground to the slowest pace since the first month of the pandemic as buyers contend with some of the highest borrowing costs they’ve seen in 15 years.
Apr 6, 2017
Gluskin Sheff Chief Economist David Rosenberg is joining the growing chorus of calls for government intervention into the Toronto housing market. In an interview on BNN, Rosenberg, who correctly called the U.S. housing bubble in 2005, said the massive deviation from historical norms has him drawing comparisons between the two situations.
“This bubble is on par with what we had in the States back in ’05, ’06, ’07,” he said. “We have to actually take a look at the situation. The housing market here is in a classic price bubble. If you don’t acknowledge that, you have your head in the sand.”
Rosenberg warned unchecked increases in home prices are becoming a social issue.
“It’s not an equity, it’s not a bond -- it’s where people live,” he said. “Where home prices are in Toronto, they absorb 13 years of average family income. That is completely abnormal. We’ve never seen this before.”
Rosenberg said he’d be singing a different tune if price increases were running in line with any of the usual economic fundamentals, such as job growth, rising incomes, or nominal GDP growth.
“We’re out of equilibrium, and when we’re out of equilibrium, or there’s some sort of market failure, are there grounds there for government intervention? I think even the most ardent libertarian would say ‘yes,’” he said.
Rosenberg said there are a trio of levers the government can pull to cool down the market. Authorities can address supply, which he said has already been “kiboshed.” Interest rates can be raised, but Rosenberg doesn’t believe the Bank of Canada will do that. Or new policy can be drafted to address the prevalence of speculation.
“These are not prices driven by the local fundamentals -- this is the foreign buyer coming in,” Rosenberg said. “Toronto has really emerged as a first-class city, not just politically, not just culturally and economically, but also in terms of being a major financial centre. But if you’re going to ask me at this stage, ‘do we need to approach taxation of this capital coming in differently to curb the demand?’ [That’s] absolutely right.”
Rosenberg said the meteoric increase in home prices means the impact of a correction would not be as frightening as it would during periods of more normal market conditions.
“There used to be time when you’d think ‘wow, a 30 per cent decline in home prices, how terrible that would be.’ That would just take you back to where we were a year ago.”